Hidden hands behind penny stock surge (The Edge)

Special Report: Hidden hands behind penny stock surge 

The Edge Malaysia September 30, 2020

This article first appeared in The Edge Malaysia Weekly, on September 21, 2020 - September 27, 2020.

ASTUTE market observers would have noticed on the local bourse a group of individuals, supposedly acting in concert, who have amassed shares in more than 20 publicly traded companies. These companies — linked via shareholding and directorships — are often on the most actively traded list, with huge, fluctuating share prices. “It (the companies) is all linked to the same person; usually, the most actively traded list on a daily basis involves these counters,” one source says when asked which are the companies that are linked. 

However, research by The Edge (see chart on the 21 companies) indicates that while other businessmen have surfaced, the individual said to be in control of the group of companies is not officially onboard or present as a shareholder.   “This [his not surfacing] could be due to several issues,” another source adds. 

It is also telling that nine of the 21 companies mentioned — 

• AT Systemization Bhd, 
• MLabs Systems Bhd, 
• Focus Dynamics Group Bhd, 
• mTouche Technology Bhd, 
• Fintec Global Bhd, 
• XOX Bhd, 
• M3Technologies (Asia) Bhd and 
• NetX Holdings Bhd 

— have their principal place of business, head office, business office or corporate office in Menara Lien Hoe, near Tropicana Golf Country Resort in Petaling Jaya. 

On its website, Lambo Group Bhd states that its address is at Menara Lien Hoe, even though the address in its annual report is in Old Klang Road in Kuala Lumpur. 

In 2006, Lien Hoe Corp Bhd sold Lien Hoe Tower Sdn Bhd, which owns Menara Lien Hoe, to privately held E-Globalfocus Sdn Bhd for RM1 and the assumption of RM43 million in debts. Meanwhile, E-Globalfocus was 68%-controlled by Cubes Innovative Sdn Bhd, a company 99%-controlled by Chuah Hock Soon. 

Chuah and businessman Datuk Kenneth Vun @ Vun Yun Lun were charged with four others in July 2014 for allegedly manipulating DVM Technology Bhd shares in March 2006. 

Vun has had several issues with the Securities Commission Malaysia and, in 2009, had to restitute RM2.496 million — being the amount of company funds that he had caused to be misused for his personal benefit, according to the regulator — to his then flagship FTEC Resources Bhd. Since FTEC — which morphed into Tecasia Bhd and later Mangotone Bhd — was delisted, 

Vun has had little direct presence in the market. However, Vun’s two sisters, Carol Vun On Nei and Grace Vun Siaw Nei, hold stakes of 3.64% and 0.67% respectively in Xidelang Holdings Ltd. 

Fragmented shareholding 

While Fintec Global seems to be a prominent company at the centre of the maze, its shareholding is fragmented, with several blocks of shares parked under Sanston Financial Group Ltd. In several of the 21 companies on the list, Sanston Financial is present in the shareholding list. Other companies that surface as shareholders in these list of companies include Global Prime Partners Ltd and Cita Realiti Sdn Bhd, a private company wholly-owned by one Kamarudin Khalil. Other shareholders, albeit usually holding small stakes, among the 21 companies include Datuk Jacky Pang Chow Huat — who, apart from a 11.84% stake in Sanichi Technology Bhd — has small stakes in DGB Asia Bhd, Focus Dynamics, MNC Wireless Bhd and Xidelang. Pang is also a director in Sanichi Technology.

Meanwhile, businessman Mak Siew Wei has 23.4% in AT Systemization, 17.07% in Green Ocean Corp Bhd and small stakes in Focus Dynamics and Xidelang. He is also a director at AT Systemization, Green Ocean and Saudee Group Bhd. Datuk Eddie Chai Woon Chet recently acquired a 62.37% stake in restaurant operator Oversea Enterprise Bhd, and has a 6.71% shareholding in Anzo Holdings Bhd, where he is managing director and has a board position in M3Technologies (Asia). Another name frequently seen is Datuk Kua Khai Shyuan, who, besides a 5.9% stake in mTouche Technology, has small shareholdings in Focus Dynamics, PDZ Holdings Bhd and Sanichi Technology, and has board seats on Trive Property Bhd, DGB Asia and MNC Wireless. Former Umno treasurer and former Bank Simpanan Nasional Bhd chairman Datuk Abdul Azim Mohd Zabidi surfaces as a director in four of the companies — Fintec Global, DGB Asia, Anzo and XOX. 

Most of the companies are loss-making and small in terms of market capitalisation, with the exception of Focus Dynamics, which has a market value exceeding RM5 billion. Nevertheless, Focus Dynamics, which is involved in operating food and beverage outlets, seems to be the star performer, with its stock price hitting a multiple-year high of RM2.64 recently on Sept 17, despite mustering a meagre RM3.08 million in net profit from RM20.72 million in revenue for its six months ended June this year. Year to date, Focus Dynamics stock has gained about 400%. 

Irrational exuberance 

Trading volume on most of the 21 companies is generally high, and many have shown unexplainable strong gains over the past few months. 

• For instance, Saudee’s stock hit a low of eight sen on March 17, and picked up momentum in June to hit a 52-week high of 67 sen on Aug 13, gaining more than 300%. For its nine months ended April this year, Saudee, whose mainstay is in frozen food and poultry, suffered a net loss of RM27.78 million from RM57.61 million in revenue. Last Friday, Saudee closed at 48 sen, translating into a market capitalisation of RM77.3 million. 
• If you are impressed with Saudee’s gains, Anzo — a loss-making company that has a business in timber products — gained more than 1,000% from mid-May to hit a high of 26 sen in July. Anzo closed at 11.5 sen last Friday, giving it a market capitalization of RM102.7 million. 

There are several companies on the list that have shown similar patterns. 

• XOX, which is involved in cellular telecommunication services, gained more than 430% from mid-July to hit a high of 39.5 sen at end-August. In mid-March this year, XOX was trading at one sen. The stock closed last Friday at 19.5 sen, translating into a market value of RM562.8 million.
• Ailing shipping company PDZ’s stock was trading at one sen in mid-March, but at end-June, it gained more than 500% to 32.5 sen in mid-July. For a company mired in law suits and a significant dearth of shipping assets, PDZ’s meteoric rise is surprising to many. PDZ ended last Friday at 10 sen, giving it a value of RM89.4 million. 
• Similarly, Sanichi Technology, which is in precision moulding, saw a sudden surge in trading volume at end-May, with its stock spiking more than 150% to hit a high of 12.5 sen on June 2, after which it tapered off. 

While the peaks may be enticing to punters, the change in fortune, with counters falling to their troughs, can be a deterrent. 

• mTouche Technology, which has a wireless network and mobile messaging business, saw its stock crash from a high of 20.5 sen on Feb 20 this year to a low of 5.5 sen on May 12. 
• DGB Asia, a tracking solutions company, was trading at 19.5 sen in the early part of November last year, but by mid-March, it had shed most of its value to close at 1.5 sen on March 19. 

It is also noteworthy that companies such as Water Beaute World Bhd and WBW Global Sdn Bhd, have 1.02% and 0.42% respectively in Trive Property. These two companies were involved in get-rich-quick and fake online investment schemes. Both these companies were reported in the past to have stakes in XOX, while WBW Global also had a substantial stake in Anzo Holdings.

https://www.theedgemarkets.com/article/special-report-hidden-hands-behind-penny-stock-surge?type=malaysia

Comment:

Fine piece of investigative financial investigation and journalism.  Thanks to Edge.

Understanding Stock Market (A+++)

Stock Market Scams

As an investor, you must be aware of the stock market scams. The following are two of the most common stock scams.

1. The Pump and Dump
The pump and dump is one of the easiest and most common ways of taking money away from unsuspecting investors. Although it is illegal, the use of the pump and dump has actually increased because the Internet has made it possible to reach millions more people.

Here’s how the pump and dump works:
First, company insiders try to convince outsiders to buy a stock, usually the stock of a small over-the-counter company (Penny stocks). Investors are led to believe that this is a “once-in-a-lifetime” opportunity to make a small fortune. The fraudsters will pump up interest in the stock by sending messages through Internet chat rooms, or posting overly optimistic press releases.

Before the Internet, pump and dumpers used to call people on the telephone (often called Boiler Rooms). The idea is to artificially pump up the price of a stock by spreading false news. The stock price rises because of increased buying and speculation, not because of anything positive happening in the company.

As the stock goes higher, those with inside knowledge are prepared for the “dump.” As more people buy shares of the stock, the insiders sell all their shares for a huge profit. Eventually, the truth comes out, and the stock price falls as more people sell. Guess who is left holding the shares of the now nearly worthless stock? You guessed it – the unsuspecting investors who bought into the hype. They probably thought the price could go higher, so they never sold their shares.




The pump and dump is one of the oldest and most effective scams. Usually, pump and dumps are used on small stocks selling below $1.00 a share because it is easier for pump-and-dumpers to manipulate the stock price with smaller stocks.



2. Insider Trading
There are actually two types of insider trading: legal and illegal.

Legal insider trading is that done by company employees (insiders) who file proper paperwork with the SEC before buying and selling shares in their company. These documents are available for viewing on the SEC Web site.

On the other hand, illegal insider trading occurs when company employees buy and sell stocks based on information that is not known to the public. For example, it’s illegal for the managers of XYZ Company to buy additional shares of stock in the company if they know that a revolutionary new product is about to be released. It’s even illegal for you to buy shares of stock in that situation if company insiders (perhaps your neighbor) tell you about it.

Do you think insider trading is common?
It certainly is. It occurs a lot more often than many people think. Every once in a while the SEC catches a celebrity just to make a point that it’s watching. Nevertheless, it’s my estimate that thousands of insiders are using information gleaned from the companies they work for to make profitable transactions. It’s an open secret that those in the know are trading stocks on inside information.

Our corporate punishments are the laughing stock among foreigners. A man was sentenced to 25 weeks in jail for stealing 80 pairs of women's panties.

Time for harsher penalties

By Zuraimi Abdullah

Published: 2010/06/07

There are many ways to destabilise or mismanage a company, and in Kenmark case, its top executive and directors from Taiwan went AWOL

There are many ways to destabilise or mismanage a company, and along the way, upset and annoy its minority shareholders.

In the case of Kenmark Industrial (M) Co Bhd, its top executive and directors from Taiwan went AWOL. The furniture maker's shares were sold down, losing some RM140 million of market value in a matter of days. The stock did bounce back, but not before a big damage was done and a new, "friendly" major shareholder was installed.

The latest file marked "How to upset your minority shareholders" involves Linear Corp Bhd. Initial company probe showed that one of its directors had used his autocratic rule to hand out RM36 million to a project owner/developer. The amount was an advance for a RM1.66 billion contract Perak Linear had secured from the developer, but appeared not viable.

Kenmark and Linear are among a list of listed companies that have run foul of corporate rules. Kimble Corp Bhd and Tat Sang Bhd are counted in the list, too.

Kimble, another Taiwan-owned furniture maker, breached a listing requirement in 2008 for failing to disclose in its fourth quarter 2007 results that it had made provision for doubtful debts of RM33.7 million.

Its managing director Datuk Yao Bor Bin and former executive director Yao Po Chen were fined by Bursa Malaysia a total of RM75,000 "for being ambiguous and inaccurate in the announcement". The company was delisted in April 2009.

Tat Sang, another furniture maker, shocked investors with its accounting irregularities and the disappearance of key management personnel back in 2002.

Its former managing director Lim Chai Hock was sentenced to five years' jail by the Sessions Court for making false statements to Bursa Malaysia. The sentence was revised by the High Court to a five months' jail and a fine of RM200,000 in default of two months' imprisonment.

Tat Sang was plagued with financial woes just a year after its listing in 2000. It was eventually delisted in 2003.

The point here is that once a corporate manipulator is caught and goes to court, make sure he (interestingly, women is almost or non-existent in the issue) is punished accordingly.

While our local stock market watchdogs, the Securities Commission particularly, may have been swift in their action, the punitive measures appear lenient on corporate manipulators.

Some have said in jest (or are they not kidding?) that our corporate punishments are the laughing stock among foreigners. Swindle loads of money from your company and leave the country, you can then come back and face the low-decibel music.

We may have read that a man was sentenced to 25 weeks in jail for stealing 80 pairs of women's panties. For mismanaging or embezzling millions of ringgit or causing hurt and grievance to many investors, you just get a fine or a brief spell in prison. Some balance in blue and white collar crimes, right? Is there a very fine line in steal, cheat or lie between a corporate man and an ordinary Joe?

In February 2006, it was reported that Fountain View Development Bhd former director Datuk Chin Chan Leong and ex-remisier were found guilty of share manipulation.

Chin was fined RM1.3 million or in default of 13 months' jail as well as sentenced to serve one day in prison for manipulating its share price seven years before.

Hiew Yoke Lan, a former Avenue Securities Sdn Bhd remisier, was fined RM1 million or 10 months default jail sentence for abetting Chin in the offence.

The offence was committed between November 18 2003 and January 20 2004. During this period, Fountain View stock had a low of RM1.99 and a high of RM6.15.

Back in November 2003, at a low of RM1.99, Fountain View carried a market capitalisation of RM885 million. At the peak of the share manipulation of around RM6.15, Fountain View carried a market capitalisation of RM2.73 billion!

If Datuk Seri Idris Jala can overhaul the various subsidies enjoyed by us, how hard can it be to review and slap the harshest possible punishment on corporate manipulators?

Read more: Time for harsher penalties http://www.btimes.com.my/Current_News/BTIMES/articles/zuview6/Article/index_html#ixzz1fhYjGpf6

Several common manipulative activities of stock market syndicates

Market syndicates have been around for many decades and their stock manipulative activities have been felt in the United States, Singapore, here and every other market around the world. Their objective has always been to push up share prices and then unload the high-priced shares on punters.


There are several common aspects of stock manipulators, brokers said, and these are some of them:


Scenario one: The IPO route

These stock plays are pre-planned even before the shares are listed on Bursa Malaysia. As the major shareholder may be imposed with a moratorium from selling any of their shares, he would park some of his shares under nominees. The shares in the names of nominees would not come under the moratorium.

The major shareholder would then place out a block of the new shares issued under the initial public offering (IPO) to a stock operator. Let's say the operator gets the shares at 50 sen a piece.

On the listing day, the stock operator will whack up the price of the shares to say RM1 and a day or a few days later, start selling the shares. He won't be able to unload all his shares at the top, but could achieve an average price of say, 70 sen.

If the major shareholder and stock operator manage to distribute (the industry term for unload) 30 million shares, they'd get to share a profit of RM6mil.




Scenario two: Sell pricey stocks to fund managers

In this kind of scheme, the syndicate will push up the share price from say, RM1 to RM3. The syndicate will then place out (industry term for selling sizeable blocks of shares) to fund managers. The fund managers would be induced to buy the shares with a commission secretly paid to them by the syndicate. If the commission is say, 20 sen on five million shares, the fund manager gets RM1mil.

Placing out shares to fund managers has the advantage of holding up the share price for a longer period of time. There would be an understanding with the fund manager that he should not immediately sell the shares into the market.

The syndicate would then continue to ramp up the share price. Inevitably, however, the syndicate will sell off his shares and they usually leave in a hurry. The fund incurs a loss but the fund manager has personally profited with the commission.
  



Scenario three: Sell pricey stocks to punters

This is the stock manipulation scheme that punters are familiar with. A syndicate gets a block of shares of say, two million from a major shareholder and churns a daily trading volume of say, five million shares. This is done by buying and selling the same shares over and over again by syndicate members and their nominees.

The churning is done in such a way that the share price goes up every day, irrespective of sentiment on the market.
The trading activity and rising price momentum gets the attention of punters. The more experienced punters usually recognise the share price is being ramped up. Nonetheless, they pile in to make a fast buck, and hopefully get out before the syndicate withdraws support for the share price.

There will be, however, punters who are newer to the game or have more greed and they stay too long in the stock. When the syndicate sells out within a day or two, usually causing the stock to trade limit-down, punters lose their shirt.

The profits of the syndicate are shared with the company's major shareholder. Usually, this involves companies that are loss-making in their business. Ramping becomes the only way the major shareholder can make a profit.

Source:
http://www.investlah.com/forum/index.php/topic,32721.msg646663.html#msg646663

Sharks, syndicates, big bosses, speculators, liars, cheaters or stock market manipulators.

I believe that most of us have heard of stock market operators. They are known by many different names and they are constantly the blame for our financial losses. In some parts of the world, they are known as sharks, syndicates, big bosses, speculators, liars, cheaters or stock market manipulators. Some of us cheer their existence and their operations while some cursed them as if they are the culprits to our financial ruins. Are they our friends or foes? As the famous saying goes, know thy foes and you will have the upper hand in battle. In this post, I will challenge and dare you to swim with the sharks and eat from the crumbs of their feeds and not to be their feed. Here I would like to bring out some of my personal thoughts on this question that most newbie has.

Ok, here is the short answer. Yes, you are right. They existed and their operations are hidden from most people especially the newbie in these financial markets. I believe if we know them and how they operate, we could actually move along with them. In fact, the whole purpose of technical analysis is to determine the balance of demand and supply and the stock market operators are some of the powerful and rich individuals or groups with much buying and selling power. If we are able to track their movement, we will be able to profit from their operations. However, if we are ignorant of their existence, we could be their next meal.


Basic facts of stock market operators are listed below for your reference.


**They work individually or in a group.
**They rely on the market trends to help them in their mission.
**The general publics are their big customers.
**They together work with the public listed company owners or insiders.
**They have a main mission objective to accomplish.
**The bulk of their operation revolved around the accumulation and the distribution of stocks from / to the general publics.
**They are rich and powerful figures but they are also humans that have emotions like all of us.
**They have extensive credit facilities and lower transaction costs than the retail investors.
**They do make mistakes like any one of us. Their mistake costs millions in dollars.
**Market news, stock market analyst, corporate announcements, word of mouth advertising, price bidding and order queues are some of their tricks and tools that they used to achieve their main objective.
**They don’t try to pick the bottom or the top like most retail investors do. Again, some of them try to do this and it costs them much sorrow and dismay.
**They do attempt to manipulate the chart to trick the chartist whether you like it or not.
**They are both the buyer and seller in the queue order at any given time.
**They are not doing charity work. They existed to make your money.


It is important to understand them well as they are big volume buyers and sellers. They can tilt the balance of demand and supply. Understanding the above traits of stock market operators will help to clear some of the myths that we have of them. Remember, they are humans like us. Some of the above points deserved to be elaborated further to bring out the secrets of trading methodologies that we will employ in our technical analysis.

Primary market trends are very important to their success and failures. If they judge wrongly on this, they could go bust easily as the power of leveraging will work against them. Remember this, they cannot fight against the trends and they don’t have the strength to do so. Don’t ever think that they can swim against the tides.

If their mission objective is to acquire stocks, they might push down the prices to cause temporary market panics to squeeze out the stocks out from the speculators and investors and this is especially true in certain countries where short-selling is not allowed. The success of this technique will depends on what sort of people that are holding the stocks. This will get rid of the intraday and short term traders. However, they will try to maintain the prices around a certain range as to keep the sellers motivated. Usually the public listed company owners and insider will work in tandem to collect the shares from the general public. After they exhausted the fearful speculators and investors, they will then turn their eyes to the stronger speculators and investors by pushing up the prices higher to catch their interests.

If their mission is to distribute stocks, they will push up the stock prices to catch the attention of speculators and investors. They will work with market analyst to create beautiful pictures of the company prospects. They will work with the public listed company owners and insiders to create scarcity of stocks. At this moment of time, they will also announce all the good news while pushing up the stock prices. They will queue up as buyers and sellers in the order queue. They will buy their own stocks to create volume to entice the crowd to follow. As they bid up and down the prices, stocks were distributed without the awareness of the general public.

I believe that this write-up will increase our trading knowledge and make us a wiser trader. I will continue to write of how we can profit from their operation in future posts whenever I managed to get my time organized.

Source:
http://www.investlah.com/forum/index.php/topic,32721.msg646677.html#msg646677

Greed kills, and pigs get slaughtered.

Two directors convicted of market manipulation

Saturday January 8, 2011

Two directors convicted of market manipulation
By M. MAGESWARI
mages@thestar.com.my


KUALA LUMPUR: Former Impetus group executive directors Datuk Philip Wong Chee Kheong and Francis Bun Lit Chun were found guilty of stock market manipulation.

Sessions Court judge S.M. Komathy Suppiah ruled yesterday that the prosecution, led by DPP Ros Mawar Rozain, had proven the case against both accused beyond a reasonable doubt.

“I confirmed that the first accused (Wong) is the mastermind of market manipulation,” she said in her verdict.

Komathy held that both accused had created a misleading appearance of active trading of Suremax Group Bhd shares by buying and selling through nine CDS accounts.

In elaborating, Komathy said her ruling was based on a thorough examination of evidence tendered by 38 prosecution witnesses and the two accused who testified under oath.

She set Jan 12 for the hearing of mitigation and sentencing. If convicted, each accused can be fined a minimum of RM1mil and jailed up to 10 years under the Securities Industry Act 1983.

On Feb 12, 2007, Wong, 49, and Bun, 41, had claimed trial to having created a misleading appearance of active trading of Suremax shares.

They were said to have committed the offence by indirectly being concerned in transactions of sale and purchase of Suremax that do not involve any change in the beneficial ownership of the said shares.

The two were accused of committing the offence together with businessman Ivan Ng Chong Yeng at Bursa Malaysia Securities Bhd in Exchange Square, Bukit Kewangan, between Nov 24, 2004 and March 22, 2005.

On Feb 12, 2007, Ng, 45, who was then group chairman of Impetus Consolidated Sdn Bhd, was acquitted of stock market manipulation through 153 CDS accounts.

Sessions Court judge Akhtar Tahir acquitted Ng after the prosecution said they wanted to withdraw both charges against him.

http://thestar.com.my/news/story.asp?file=/2011/1/8/courts/7755242&sec=courts

Market manipulation

Market manipulation

From Wikipedia, the free encyclopedia

Market manipulation describes a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency.[1]

Market manipulation is prohibited in the United States under Section 9(a)(2)[2] of the Securities Exchange Act of 1934, and in Australia under Section s 1041A of the Corporations Act 2001. The Act defines market manipulation as transactions which create an artificial price or maintain an artificial price for a tradeable security.

Examples

Pools: "Agreements, often written, among a group of traders to delegate authority to a single manager to trade in a specific stock for a specific period of time and then to share in the resulting profits or losses."[3]

Churning: "When a trader places both buy and sell orders at about the same price. The increase in activity is intended to attract additional investors, and increase the price."

Runs: "When a group of traders create activity or rumors in order to drive the price of a security up." An example is the Guinness share-trading fraud of the 1980s. In the US, this activity is usually referred to as painting the tape[4].

Ramping (the market): "Actions designed to artificially raise the market price of listed securities and to give the impression of voluminous trading, in order to make a quick profit."[5]

Wash trade: "Selling and repurchasing the same or substantially the same security for the purpose of generating activity and increasing the price"

Bear raid: "Attempting to push the price of a stock down by heavy selling or short selling."[6]

References

^ http://www.asx.com.au/supervision/participants/market_manipulation.htm
^ http://www.sec.gov/divisions/corpfin/34act/sect9.htm
^ Mahoney, Paul G., 1999. The Stock Pools and the Securities Exchange Act. Journal of Financial Economics 51, 343-369.
^ Painting The Tape
^ Sanford: Overview
^ Bear Raid: Definition and Much More from Answers.com

Be Fearful of the Market Manipulators

Dealer’s rep sanctioned for false trading, market manipulation

Written by Loong Tse Min
Friday, 09 July 2010 11:06

KUALA LUMPUR: Bursa Malaysia Securities Bhd has publicly reprimanded and fined a commissioned dealer’s representative (CDR) of Kenanga Investment Bank Bhd RM100,000 for false trading and market manipulation in the trading of Axis Incorporated Bhd shares.

In a statement yesterday, Bursa Securities said it ordered that Lee Beng Huat be struck off the register, if he was still a registered person of the exchange.

The exchange said Lee had carried out false trading and market manipulation involving about 41 million Axis shares, out of the market turnover of 104 million Axis shares, for 87 trading days in 2006 and 2007.

It said during that period, Lee had dealt in Axis shares mainly through the accounts of 10 clients.

“He had entered buy and sell orders which were manipulative in nature and which had led to false or misleading appearance of active trading in, or market for, Axis shares and tantamount to stock market manipulations,” Bursa Securities said, adding that Lee had breached trading rules.

It said the dealing in Axis shares by Lee via the 10 accounts, which were the top buyers and sellers during the period, had several characteristics:
1. Entry of orders which were several bids lower than the last done price with no real intention to have the buy orders matched.


2. Lee also engaged in order splitting, entering a series of buy orders in succession through any one of the 10 accounts with the same price. These buy orders gave rise to and created an impression of continuous demand for Axis shares which led to false or misleading appearance of active demand/market for Axis shares.


3. The buy and sell orders executed in the 10 accounts:
• had cross-trades which were matched among each other for about 12 million units of Axis shares involving Lee as their common CDR;
• resulted in the buy and sell transactions of Axis shares in the 10 accounts without any change to the beneficial ownership of Axis shares (NCBO trades) and during the relevant period, there were 65 NCBO trades involving 385,800 units of Axis shares;
• were frequently matched with the corresponding orders keyed in by another CDR from another broker which indicated that there were some form of pre-arrangements for these trades to be matched;
• resulted in trades which were rolled over periodically with the same or almost the same block of Axis shares which gave rise to the manipulative trading activities; and
• had trades which were subsequently amended to other clients’ accounts resulting in a change of the original party to the contract which is not permitted.

Bursa Securities said Lee, by engaging in the manipulations, managed to sell about 72% of the sell orders (40.98 million out of 56.67 million units of sell orders entered for the 10 accounts) and bought about 55% of the buy orders (41.6 million out of 76.14 million units of the 10 accounts’ buy orders).

It said the higher volume and percentage of the buy orders, which were subsequently cancelled and/or lapsed due to the orders being lower than the last done price resulting in lower percentage of buy orders matched, gave an impression of and created an inflated demand for Axis shares.

This, it said, led to a misleading appearance of an active market for Axis shares.

Bursa Securities said Lee had failed to take heed of the concerns raised by the exchange on his irregular trading activities in Axis shares in the 10 accounts but had continued to trade in the irregular and manipulative manner.

This article appeared in The Edge Financial Daily, July 9, 2010.



Click here for an excellent writeup on this affair:

http://whereiszemoola.blogspot.com/2010/07/stock-manipulation-on-axis-inc-dealer.html

Comment:
Fraud and market manipulation occur in every stock market.  However, in some other countries, for example Singapore and Hong Kong, those who are caught are punished severely.  Alas, in Malaysia, the fine imposed is not even enough to discourage future adventure by potential manipulators.

What to do with a "tip"? Do not Ignore, however study and scrutinise this further.

From my chatbox:

6 Jul 10, 11:38 PM
STOCK WATCH: Hi guys,tips of the year.....CRESBLD.....syndicate will goreng this stock soon...BEWARE!!!!!!!!
7 Jul 10, 08:26 AM
bb: stockwatch gave a "tip". My approach to tip is not to act on it. However, one may wish to study the stock further.
7 Jul 10, 08:26 AM
bb: Often when the "tip" reaches your ear, it is often at a late stage in the game.
7 Jul 10, 08:30 AM
bb: Don’t believe everything you hear In a market full of various news and hearsay, it is difficult to differentiate between facts and rumours.
7 Jul 10, 08:31 AM
bb: There are many instances where owners and syndicates who want to see higher stock prices purposely fabricate various news on potential contracts, corporate exercise, etc to analysts and reporters with
7 Jul 10, 08:31 AM
bb: .... with the intention to mislead investors.
7 Jul 10, 08:32 AM
bb: Every piece of news must be scrutinised to determine the authenticity and its impact on the earnings.
7 Jul 10, 08:32 AM
bb: Although this could be difficult in many cases, effort is still needed to avoid falling prey to unwarranted predators.
bb: One advice for investors is to only believe events which are more likely to happen, and only on those stocks where the management can be trusted.

Though risky, one of the advantages of the stock market is that it can be used for various purposes.

Stock Market Strategy

What do you know about the stock market business? Do you find yourself accounted enough with the information related to the stock market to start gambling? In the case, you are, we might only give you our congratulations and wish good luck and nice profit there. However, if you find it would be important for you to account yourself with some interesting facts related the stock market business we might be helpful for you. Any way, we consider it is significant to understand the fact that disproves some unauthentic information.

People all over the world are talking about the great risk that we are under when we involve our assets into the stock market gambling. There were gossips that people all over the world lost huge amounts of money in the stock exchange business. It means that the people who have heard this resist involve money at the stock market. To be honest, the great deal of potential investors keeps their assets in the bank account thinking that it is the most safety place for them. Moreover, we would not dispute as for the fact that the stock market business is the risky one. Nevertheless, you should remember the fact that your bank account would never bring as much money as the stock market might do.

Any way, you should also be well accounted with the information that the lost as well as wins at the stock market gambling depends on the proper organization the speculations. What might you do for it? The only thing that depends on you is to make the proper investment. In the other words, you should observe and discover all possible information that characterizes the stock exchange you are going to deal with.

Whatever, you think it would be of great value for you to account yourself with the portfolio of the definite stock market. The portfolio of the stock exchange, you are going to deal with as the any other portfolio, includes all needed information that might be helpful for you to make the final decision. Nevertheless, there are the plenty of additional particularities of the stock market, which are common for the every single stock exchange. We are talking about the stability, dividends, visibility and the international exposure of the definite stock exchange. However, you might take into consideration the fact that relate the education and experience of brokers that are gambling at the very stock exchange before you would invest your money in it.

Frankly speaking, the brokers are the person directly responsible for the profit and benefit of the stock market. The only broker might deal with the speculations at the stock exchange and make you win or lose additional funds.

One of the advantages of the stock market is that it can be used for various purposes. Even the people who are involved into retirement investing consider the investments into the stock market activity to be a great investment tool.



http://usabestloans.com/finance/stock-market-strategy-11/

The Way The Stock Market Works.

The Way The Stock Market Works.

I have come to the conclusion that the market is (dare I say) generally being manipulated/influenced by firstly the large institutions, Secondly by full time professional traders and day traders.

The general public and the “Mum and Dad” investors are the last to know what is actually happening and invariably the ones that lose out in the long run.

The advantage the Institutions have is the “Millions” of dollars that they have available to use at any given time. This is usually obtained from the public in the first place, in the form of Insurance, Superannuation and Managed Funds etc.Which we (the general public) all contribute to on a daily basis.

The large advantage they have is the enormous amount of shares they are able to purchase at any given time.

What occurs is that even a small movement in share price means big profits for them, because of the volume/turnover of shares which occurs whenever a share transaction takes place.

Now Volume is the “Fuel” driving the market. An uptrend in share price to survive and to continue must be nourished by new buyers who are being fed by cautious, seemingly reluctant sellers.

Consistent volume is very important, if there is to be any change in the existing trend. There must be a surge of buyers or sellers capable of changing the current share price.

Remember for every “Seller” there has to be a “Buyer” and vice versa.

The seller thinks or knows the share price is going down and the buyer thinks the opposite.

Now too much selling will invariably force the price downwards as will too much buying forces the share price upwards. This is the law of “supply and demand”.

This “Law” is taken advantage of by the large Institutions who are well aware of what happens when they buy or sell huge volumes.


Some Reasons Why Share Prices Go Upwards.

It’s always a good idea to look at stocks that have jumped in price to see what clues where there beforehand. By gaining a greater understanding of what happened before stocks jump in price, it can give you a better chance of being on board some of the next ones.

When the share price increases, it means that the buyers (on average) want to buy larger parcels of shares. When people buy large parcels of shares it generally means that they are very confident in the stock and its future prospects.

A large increase in Smart Money (Traders in the know) and Buyer Demand can occur before a large jump in price happens. This information lets you know that other people are very interested in this stock and are prepared to spend big money on it. This can be another good clue.

When you see large spikes in Buyer Demand when the price is starting to rise upwards it often indicates that the stock is set for a much longer bull run. The rushes for stock are caused from either news or rumors and (as long as there is no bad news) this activity will then start attracting attention from other traders.

Another great clue is to be found when Directors are buying there own stock. It means that they must have confidence in their own company to invest money in it. You can find out when Directors are buying and selling by checking the ASX company announcements on a daily basis.

Companies are on strict instructions to notify the ASX when ever a Director buys or sell shares in his company. Directors buying are usually based on a profit motive.

Christopher Strudwick is a keen amateur share trader on the Australian Stock Market Visit his weblog for more free articles and useful information at http://www.asxnewbie.com


Read more about • The Way the Stock Market Works | My Stocks by mystocks.netai.net

http://mystocks.netai.net/5105/the-way-the-stock-market-works/

Paying the price of a new Mercedes to buy a Proton! Beware of manipulators in the market place

Overpriced: When you are buying a Proton for the price of a new Mercedes.

Undervalued: When you are buying a new Mercedes for the price of a Proton.

Most of the time (80%), the prices of stocks in the stock market are fairly priced.

On some occasions (80%), they are mispriced, either too high or too low relative to their intrinsic value.

If you can distinguish value and price,

• you can hope to gain a lot in the stock market, usually during the bear period, by buying a new Mercedes for the price of a Proton.  ;-)

If you are unable to distinguish value and price,

• you can conversely end up crying with a big hole in your bank account when you pay in the stock market, usually during the bull period, the price of a new Mercedes for a Proton.  :-(

Read:

Fountain View's Share Manipulators Caught And Fined!
http://whereiszemoola.blogspot.com/2010/02/fountain-views-share-manipulators.html

Questions: Why are manipulated stocks so risky?

Questions: Why are manipulated stocks so risky?

There are just simply too many counters on Bursa Malaysia, most of which are hardly touched by investors. Singapore Exchange is about 0.5x larger than Bursa Malaysia in terms of total market cap. We are 3x smaller than Taiwan, 5x smaller than Hong Kong and 200x smaller than South Korea! But we have the most number of listed companies in the world (close to 1400) after US! How can such a small economy have so many listed companies? That is because most of them are as good as worthless, which become a heaven for manipulators.

During the bull run in the early 90s, manipulators pushed the stock prices up to ridiculous prices and keep them at that level so that they can use the stocks as collateral to borrow huge sums from financial institutions. When the market crashed in the 1997-98, these financial institutions suffered huge losses because many companies defaulted on their payment and their shares which are placed as collateral are worth close to nothing. As a result, financial institutions are very careful when lending money to those who use stocks as collateral. Nowadays, they do their on valuation on the stocks before lending out money.

Since they can't mortgage the stocks, how can the manipulators gain by pushing the stock price up? The most common way these manipulators earn money is by accumulating these shares at low prices (20c for example). In most cases, the shares are cornered before they start manipulating ths prices. They will then push up the share price to maybe $1 and in the process, create large volumes. There is a case recently where someone was charged with creating about 100 trading accounts to create fake trading volume by using the accounts to repeatedly buy and sell shares of the same company.

When these shares are being pushed to $1, many punters will be enticed to join in. In the process of pushing the share price, some manipulators are smart enough to make a few super ambitious announcements to stir up interest. Some even put in large buy orders to create strong demand for the shares to further entice punters. As punters get into the stock, they will slowly release shares into the market while at the same time, put in large buy orders to create the so called fake demand.

The most risky part occurs when the manipulators have released enough stocks to the market. They will then dump the rest of their shares at lower prices (maybe 50c-80c). When the shares drop to 40-50c level, more punters will be interested to pick them up, believing that the stock could rebound. However, this only gives the manipulators another chance to dump their remaining shares.

Manipulators make huge profits when punters join in the 'bull run' in the counter. You can make money if you are lucky enough to exit at the right time before they dump the shares. It is very hard to predict when they will dump it. Most of the time, manipulators dump their shares when the counter looked like it was undroppable. Purchasing stocks that is being pushed is extremely risky because when it drops, it practically crashes. You can possibly earn some money every time you exit at the right time but when you fail to exit before the dump, you stand to lose a bomb.

The share market is meant for investors. I have seen many punters (some of whom are my friends) who have left the share market because they lose too much trading speculative stocks. For those who still follow stocks that are being pushed, I would suggest you just bring your money to Genting Casino. The chances are better and you can feel more adrenalin rush watching the roulette wheel that some blinking on the computer screen.

In Malaysia, most of these speculative stocks are on the brink of bankruptcy. The chances of them surviving or turning around is close to nil. Businesses are not easy to turn around, especially with the corrupt practices and poor managements in Malaysia. In Australia, the speculative stocks are mostly exploration companies searching for resources like gold, copper, zinc, uranium and others. These explorers all have chances of striking it rich with a bit of luck. Therefore, I would suggest to those who like to follow the speculative stocks in Malaysia to try trade on ASX (you have to figure out how to create an account), where you can make a lot with some luck. In Malaysia, luck alone wont be enough. Investing based on fundamentals and track record is the only way.

Disclaimer: This report is brought to you by Investssmart, an unlicensed investment adviser. Please exercise your own judgment or seek professional advice from your remisiers. By law, they are the experts. I am not responsible for your investment decisions.

http://investssmart.blogspot.com/2006_01_01_archive.html

Stock Market Operators: Do they exist?

I believe that most of us have heard of stock market operators. They are known by many different names and they are constantly the blame for our financial losses. In some parts of the world, they are known as sharks, syndicates, big bosses, speculators, liars, cheaters or stock market manipulators. Some of us cheer their existence and their operations while some cursed them as if they are the culprits to our financial ruins. Are they our friends or foes? As the famous saying goes, know thy foes and you will have the upper hand in battle. In this post, I will challenge and dare you to swim with the sharks and eat from the crumbs of their feeds and not to be their feed. Here I would like to bring out some of my personal thoughts on this question that most newbie has.


Ok, here is the short answer. Yes, you are right. They existed and their operations are hidden from most people especially the newbie in these financial markets. I believe if we know them and how they operate, we could actually move along with them. In fact, the whole purpose of technical analysis is to determine the balance of demand and supply and the stock market operators are some of the powerful and rich individuals or groups with much buying and selling power. If we are able to track their movement, we will be able to profit from their operations. However, if we are ignorant of their existence, we could be their next meal.

Basic facts of stock market operators are listed below for your reference.

They work individually or in a group.


They rely on the market trends to help them in their mission.


The general publics are their big customers.


They together work with the public listed company owners or insiders.


They have a main mission objective to accomplish.
The bulk of their operation revolved around the accumulation and the distribution of stocks from / to the general publics.


They are rich and powerful figures but they are also humans that have emotions like all of us.


They have extensive credit facilities and lower transaction costs than the retail investors.


They do make mistakes like any one of us. Their mistake costs millions in dollars.
Market news, stock market analyst, corporate announcements, word of mouth advertising, price bidding and order queues are some of their tricks and tools that they used to achieve their main objective.


They don?t try to pick the bottom or the top like most retail investors do. Again, some of them try to do this and it costs them much sorrow and dismay.


They do attempt to manipulate the chart to trick the chartist whether you like it or not.


They are both the buyer and seller in the queue order at any given time.


They are not doing charity work. They existed to make your money. It is important to understand them well as they are big volume buyers and sellers. They can tilt the balance of demand and supply. Understanding the above traits of stock market operators will help to clear some of the myths that we have of them. Remember, they are humans like us. Some of the above points deserved to be elaborated further to bring out the secrets of trading methodologies that we will employ in our technical analysis.

Primary market trends are very important to their success and failures. If they judge wrongly on this, they could go bust easily as the power of leveraging will work against them. Remember this, they cannot fight against the trends and they don?t have the strength to do so. Don?t ever think that they can swim against the tides.

If their mission objective is to acquire stocks, they might push down the prices to cause temporary market panics to squeeze out the stocks out from the speculators and investors and this is especially true in certain countries where short-selling is not allowed. The success of this technique will depends on what sort of people that are holding the stocks. This will get rid of the intraday and short term traders. However, they will try to maintain the prices around a certain range as to keep the sellers motivated. Usually the public listed company owners and insider will work in tandem to collect the shares from the general public. After they exhausted the fearful speculators and investors, they will then turn their eyes to the stronger speculators and investors by pushing up the prices higher to catch their interests.

If their mission is to distribute stocks, they will push up the stock prices to catch the attention of speculators and investors. They will work with market analyst to create beautiful pictures of the company prospects. They will work with the public listed company owners and insiders to create scarcity of stocks. At this moment of time, they will also announce all the good news while pushing up the stock prices. They will queue up as buyers and sellers in the order queue. They will buy their own stocks to create volume to entice the crowd to follow. As they bid up and down the prices, stocks were distributed without the awareness of the general public.

I believe that this write-up will increase our trading knowledge and make us a wiser trader. I will continue to write of how we can profit from their operation in future posts whenever I managed to get my time organized.


http://stockmarket.tailou.com/viewtopic.php?f=23&t=3807&p=26266

Thanks SC and Bursa, for alerting investors of possible market manipulations

In todays paper in the Star (18.6.09), the headline reads:

On the alert. SC and Bursa to act against market manipulators.

Investors beware!

Thursday June 18, 2009
SC and Bursa to act against market manipulators
By YAP LENG KUEN


PETALING JAYA: The Securities Commission (SC) and Bursa Malaysia will investigate and take action if there is any evidence of stock market manipulation amidst the current liquidity-driven rally.

“Both the SC and Bursa carry out surveillance of all trading activities on the exchange.

“The scope of surveillance covers all dimensions of the trading activities. If there is any evidence of market manipulation, the SC and/or Bursa Malaysia will investigate and take appropriate enforcement action,” an SC spokesman said in an e-mail response to queries from StarBiz. “This is further complemented by SC’s investor education programmes conducted regularly to help investors make informed investment decisions.”

Since early May, Bursa has issued six unusual market activity (UMA) queries, following sudden surges or drops in share price or volume traded. The first query went to Unisem (M) Bhd (May 6), followed by Measat Global Bhd (June 4), Transmile Group Bhd (June 5), SAAG Consolidated (M) Bhd and Compugates Holdings Bhd (June 11) and Equine Capital Bhd (June 16).


Recent price movements of some counters

Bursa chief regulatory officer Selvarany Rasiah said as a frontline regulator, Bursa had a duty to ensure an orderly and fair market.

“The maintenance of an orderly and fair market necessarily means that the exchange focuses on identifying the presence of any manipulative or artificial nature of trading on the market. On this note, to be clear, it is the manipulative or artificial nature of trading (in the sense of being false or resulting from trickery or deception) that is of concern to the exchange,’’ she said in a statement to StarBiz.

“Where trading takes place in an informed market and in the absence of manipulative conduct, the exchange believes it is a matter for investors to make a decision as to whether to participate.

“So-called speculative trading is not in itself offensive or undesirable but it is not tolerated by the exchange if it transforms into a market offence such as manipulative trading conduct.’’

“While those in the market may only see the UMAs or market alerts – or only be aware of the contact we have directly with them – the exchange engages in a high level of activity across all facets of the market, monitoring and investigating trading and initiating a range of regulatory responses to ensure that the market is fair, orderly and informed.”

On comments that the current market alerts were reminiscent of those issued in old times, she said: “Stock markets, this one included, tend to be cyclical and when market levels change, the exchange will come in as necessary to inform investors about the importance of ignoring rumours and basing their trading decisions on research and a careful consideration of the fundamentals of the stocks that make up the market.

“The exchange will continue its active monitoring of trading, engagement with brokers and registered persons, its use of a range of regulatory responses from those that can be implemented immediately to investigation and disciplinary action which necessarily takes more time to complete.’’

Hence, she added, the market could expect to see continued use of UMAs and market alerts, a continuation of Bursa’s awareness raising activities and emphasis on the role of listed issuers, participating organisations and registered persons’ play in ensuring market integrity.

“We note also the value, particularly to investors, of the publication and reporting of market alerts and other information about trading activity on our market,” she said.

---

"Where trading takes place in an informed market and in the absence of manipulative conduct, the exchange believes it is a matter for the investors to make a decision as to whether to participate.

So-called speculative trading is not in itself offensive or undesirable but it is not tolerated by the exchange if it transforms into a market offence such as manipulative trading conduct."

----

Wednesday June 17, 2009

Equine queried on heavy trading


PETALING JAYA: Equine Capital Bhd (ECB) in reply to a Bursa Malaysia query yesterday said it was not aware of any event that may have contributed to the unusual market activity in its shares recently, in particular, on June 15.

ECB was the most heavily traded counter on Monday with 50.28 millions exchanging hands.

In a filing with Bursa, the ECB board of directors said that they were not aware of any corporate development relating to ECB group’s business and affairs that had not been previously announced that may account for the unusual market activity.

“We do not have any other possible explanation to account for the unusual market activity,” it added.

Since April, Bursa has issued five unusual market activity queries, issued when the share price or volume of a company suddenly surges.

The first for the year was on May 6 when it queried Unisem (M) Bhd, followed by four more this month, starting with Measat Global Bhd on June 4, Transmile Group Bhd the next day, and SAAG Consolidated (M) Bhd and Compugates Holdings Bhd on June 11.

Meanwhile, Compugates told Bursa yesterday group managing director and substantial shareholder Goh Kheng Peow had received margin call notices between June 2 and June 7 from Malacca Securities, EON Bank Bhd, OSK Investment Bank Bhd and Malayan Banking Bhd.

Earlier, in a reply to Bursa’s query on June 11, Compugates said the recent high trading volume was caused by a reduction of margin facility to Goh by stockbrokers.

For example, RM5mil was revised downwards to RM1.5mil effective May 20 by TA Securities.

EQUINE : [Stock Watch] [News]

http://biz.thestar.com.my/news/story.asp?file=/2009/6/17/business/4132023&sec=business

Market Manipulation

Charles Dow wrote in 1901: "The manipulator is all-powerful for a time. He can move market prices up or down. He can mislead investors, inducing them to buy when he wishes to sell, and sell when he wishes to buy; but manipulation in a stock cannot be permanent, and, in the end, the investor learns the approximate truth. His decision to keep his stock or sell it then makes a price independent of speculation and, in a large sense, indicative of true value."

In the current regulatory situation, manipulation, though it does crop up, is less common.

Also read:
Stock Market Manipulations
25 Nov 2008 BURSA MALAYSIA SECURITIES BERHAD REPRIMANDS, FINES AND STRIKES OFF PNEH TEE EONG, A COMMISSIONED DEALER'S REPRESENTATIVE OF M&A SECURITIES SDN BHD FROM THE REGISTER FOR VIOLATION OF RULES 404.3(1)(a) & (b) AND 401.1(2) & (3) OF THE RULES OF BURSA SECURITIES

Stock Market Investment

Stock Market Investment

Stock Market Investment refers to the investment in the market; where exchange of company stocks or collective shares of the companies and other kinds of securities and derivatives takes place. Stocks are traded in Stock Market by the help of Stock Exchange.

The Stock Exchange brings the sellers and buyers of stocks and securities under same roof. The available stocks are listed and traded in the Stock Exchange among the buyers and the sellers. Proper investment in Stock Market essentially requires detailed knowledge of Stock Market, its’ participants, knowledge about the functioning, behavior and contribution of the stock market.

Main Participants of the Stock market

The main participants of Stock Market are the individual investors, banks, insurance companies, mutual funds and pension funds. Since, markets of today have turned more “institutionalized”, the largest share of the market participation comes from the large institutions rather than individual rich investors.

Functioning of the Stock Market

The stock market functions through the Stock Exchanges. Stock Exchanges can be a physical entity and sometimes a virtual entity. In physical stock exchanges, transactions are made by auctioning. In this case, a buyer offers a specific price for a stock by verbal bid and the seller asks a specific price for the stock. When the buyer’s bid price and seller’s price match, exchange of stock takes place. In the presence of multiple buyers and sellers market operations are carried on a first come first served basis.

Contribution of Stock Market

Stock Market is the best medium of raising funds. Businesses which need financing for expansion or improvement can easily raise required capital by participating in Stock Market. On the other hand, for the investors; investing in stocks is a better option than investing in property or real estate as the stocks contain more liquidity than any other property. This means, stocks can be sold more easily and quickly than any other property and so, the investors can get their money back by selling the stocks anytime they need.

The prices of stocks or shares in the Stock

Market have strong effects on the economy in various ways. Prices of stock influence business investment, individual household consumption and wealth of individual households. For this deepening effect, Central banks of each country keep a track of the Stock Market activities. A proper functioning of Stock Market in a country can result in low costs, increased production of goods and services and increased level of employment. In this way, an efficient Stock Market can contribute to economic growth of the country.

Behavior of the Stock Market

The behavior of Stock Market and the prices of stocks depend greatly on the speculation of the investors. So, over- reactions and wrong speculation can give rise to irrational behavior of the Stock Market. Excessive optimistic speculation of future prospects can raise the prices of stocks to an extreme high and excessive pessimism on the part of the investors can result in extremely low prices. Stock Market behavior is also affected by the psychology of “Group Thinking”. The thinking of a majority group of people many times influences others to think in the same line and the Stock Market behavior gets naturally affected.

Sometimes the Stock Market behavior is affected by rumors and mass panic. The prices of the stocks fluctuate tremendously by the economic use even if it has nothing to do with values of stocks and securities.

So, it is extremely difficult to make predictions about the Stock Market and the inexperienced investors who are not that much interested in financial analysis of stocks; rarely get the financial assistance from the Stock Market at the time of need.

Source:

http://www.economywatch.com/stock-markets-in-world/stock-market-investment.html